In May, startups across Africa attracted more than $345 million in funding through a total of 65 deals. This figure more than doubles the amount raised during the same period last year, according to a recent report by the research firm Briter.
While the overall funding surged, the report also highlights an interesting trend: the number of deals and participating companies actually declined compared to previous years. This pattern suggests that a smaller number of startups are securing larger funding rounds, indicating increased investor interest in more established or high-potential companies rather than numerous smaller deals.
Sector Highlights and Funding Dynamics
The fintech sector emerged as the clear leader, capturing approximately 34% of the total funding raised in May. This dominance underscores the continued importance of financial technology in Africa’s economic transformation, especially given the challenges many countries face with traditional banking access. Cleantech was not far behind, buoyed by Sun King’s large debt deal that raised around $80 million. Sun King’s investment will be used to expand access to sustainable energy solutions across Nigeria, contributing to the continent’s growing focus on climate and environmental issues.
An important trend highlighted in the report is the evolving role of different financing instruments. While equity remains the primary mode of raising capital—accounting for more than half of the total funding volume—debt financing is increasingly making an impact. Despite representing only 8% of the total deal volume, debt accounted for roughly 32% of the total funds raised. This is largely owing to the larger size of debt transactions, often facilitated by specialized financial vehicles that support early-stage and high-growth companies in Africa. This shift suggests that debt instruments are gaining prominence as a viable way for startups to raise significant capital without diluting ownership.
Grants continued to be an essential form of early-stage support, particularly in the education technology (EdTech) sector. The Mastercard Foundation played a notable role in this space by funding startups in Nigeria and Kenya with $100,000 grants. These grants are not only providing crucial funding but also come with mentorship and business development support, helping fledgling startups scale more effectively.
International Involvement and Investment Confidence
The report also indicates growing confidence from international and multilateral organizations in Africa’s climate and clean energy sectors. A prime example is the $179.6 million guarantee issued by the Multilateral Investment Guarantee Agency (MIGA), a part of the World Bank Group. This guarantee was provided to KOKO Networks, a Kenyan clean energy startup, supporting its efforts to expand clean cooking solutions across Kenya. Such high-profile support reflects increasing global interest and trust in Africa’s climate tech innovation and the potential for scalable environmental solutions.
Regional Momentum: Egypt Takes a Leading Role
From a geographic perspective, Egypt stood out as the continent’s fundraising powerhouse in May, accounting for 51% of all funding raised. The country saw 12 deals across various instruments including equity, debt, and bonds. A notable deal was MNT-Halan's $50 million bond issuance, demonstrating the diversification of capital-raising options available to African startups. Outside Egypt, Nigeria and Kenya maintained strong activity levels, while countries like Ghana, Morocco, Tunisia, and Uganda experienced more limited activity, with only a few deals each.
Growing Exit Activity and Market Maturity
The African startup ecosystem is also showing signs of maturity through increased exit activity. In May, three companies: Baobab+, Qardy, and Shopa, were acquired, adding to the 22 exits recorded this year. This already surpasses the number of exits for the same period last year, indicating a more dynamic and mature market environment. For instance, Qardy was acquired by Catalyst Partners Middle East in a deal valued at $23 million, reflecting notable investor interest in scalable startups in the region.
Looking Ahead: A Bright Future
Overall, the data paints an optimistic picture for Africa’s startup ecosystem. The tremendous increase in funding, the diversification of investment instruments, and the strong international backing signal that Africa is emerging as a fertile ground for innovation and entrepreneurship. It demonstrates that despite challenges, the continent’s startups are attracting increasingly sophisticated investors who see long-term potential.
As the ecosystem continues to mature, we can expect more robust funding cycles, an expanding pipeline of high-growth companies, and a strengthening of Africa’s position in global innovation hubs. The investments made today lay the foundation for a thriving entrepreneurial future that could significantly impact local economies, create jobs, and promote sustainable development across the continent.
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